Conclusion The modern corporation is a remarkable form of economic organization

Question

Conclusion The modern corporation is a remarkable form of economic organization that enables eve in society to interact for mutual gain. Ideally, everyone should benefit from the wealth-creati power of business corporations. In order for corporations to function and provide their benef several problems must be solved. First, corporations must be controlled so that investe employees, customers, suppliers, and other groups that participate in productive activity a protected. This is the task of corporate governance. Second, there must be a control envir within the corporation to detect and deter employee misconduct. This is the task of corpora ethics. Third, corporations must be held accountable so that corporate executives do not enga in fraud or other wrongdoing. In addition to corporate governance, this task is addressed accounting and auditing, a corporation's board of directors, and the criminal law. When economic system combines all of these elements together-corporate governance, co ethics, and corporate accountability- the results can be a prosperous society. Where one or ma of the elements is absent, the corporation cannot achieve its full potential. CASE 13.3 Explore the Concept on mythinkinglab.com Sears Auto Centers On June 11, 1992, the CEO of Sears, Roebuck and Company, Edward A. Brennan, learned that t fornia Department of Consumer Affairs (DCA) was seeking to shut down the 72 Sears Aut Centers in that stateA yearlong undercover investigation by the DCA had found numero instances in which Sears employees had performed unnecessary repairs and services. New Jersey quickly announced similar charges against six local Sears Auto Centers, and sever other states, including Florida, Illinois, and New York, opened their own probes int possible consumer fraud. In the wake of this adverse publicity, revenues from the auto centers fe 15 percent, and the public's trust in Sears was badly shaken. Sears Auto Centers, which were generally connected with a Sears department stor concentrated on basic "undercar" services involving tires, brakes, mufflers, shock absorber and steering mechanisms. Investigators from the DCA's Bureau of Automotive Repa purchased old vehicles in need of minor repairs and disassembled the brakes and suspensio systems. After examining and photographing each part, the investigators towed th automobiles to a shop where they requested a brake inspection. In 34 of 38 instances, Sear employees recommended unnecessary repairs and services, and some auto centers charged f parts that were not installed or work that was not performed. The average overcharge was $23 but in two cases the amount overcharged exceeded $500. Brennan had been notified in December 1991 of early results from the investigation, an Sears executives negotiated for six months with California officials. The company objected to th state's position that no part should be replaced unless it had failed and claimed that many repair

Explanation / Answer

every firm works for profit only, every one knows it. but if the firm only looks for benefits of promoters and shareholders, those kind of firms may not survive for a long term. they will exit from the market with in short time only. a firm runs with efforts and support of many people, all they together called as stakeholders. they includes:

promoters/owners: who contribute their funds and idea to establish the business, employ all the resouces, prepare strategies with management, and finally runs the firm.

employees: also called as internal customers to a firm. these are the people who contribute their services, knowledge, talent, time and efforts towards the firm and its growth. the management and owners should identify the needs and wants of these people and works to fulfill these. the success or failure of any firm depends on employees and mangement only.

customers: who supports a firm by purchasing its services and products. these people encourages the firm, by purchasing goods repetitively, and financially helps the firm to get more revenues. once, these are able to fulfill their needs with the product, they will purchase the product. if the product is not fulfill the needs of customers, then they reject the product and shift to some alternatives.

government and society, nature: government give licences and all clearing to the firm and support in all aspets. society also support the firm by providing other suplementary activities.

if a firm wants to survive for a long term, it has to fulfill the obligations of all these. and ethically it is the right way, but if works only for the obligations and requirements of owners or promoters, the remaining stakeholders do not support the firm and close it sooner.

so, the CEO do not preach like this, he has to consider the obligations of all stakeholders to the firm and help it grow.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.